New Mexico Terminates Punitive Charge on Solar Customers

Today, the New Mexico Public Regulation Commission (PRC) ordered Southwestern Public Service (SPS) to terminate Rate 59, a fee on solar customers that cost typical households with rooftop solar more than $300 a year. Since 2011, Rate 59 has limited SPS customers’ ability to save money on their utility bills with solar energy, even as the cost of solar has plummeted in that period, and as a result there are only around 112 households with solar in SPS’s New Mexico service area today. The PRC also plans to initiate a rulemaking proceeding to clarify how the state statute pertaining to solar surcharges will be interpreted in the future.

“Today’s decision is a victory for SPS customers who finally have the freedom to choose affordable solar and the opportunity to save money on their electric bill. Ending this punitive charge is especially welcome news for low-income and fixed-income residents who spend a higher portion of their income on utility bills, yet for years were unable to lower their bills with solar because of this charge,” said Rick Gilliam, Vote Solar’s program director of DG regulatory policy and expert witness in the proceeding. “We applaud Hearing Examiner Carolyn Glick and the Commission for reviewing the facts and putting control over energy bills back in the hands of New Mexico residents.”

Earthjustice and Vote Solar, in partnership with local counsel Jason Marks and the Coalition for Clean Affordable Energy, showed that Rate 59 discriminatorily collects extra fees from customers who are less expensive to serve than other customers, forced solar customers to pay for costs unrelated to their own rooftop solar, and that SPS failed to consider the proven economic benefits that rooftop solar provides to all customers, such as avoiding the need for new power lines and displacing more expensive sources of power. Rate 59 was one of the most punitive solar customer fees in the country.

“I’m incredibly thankful to Earthjustice, Vote Solar and Jason Marks. The existence of Rate 59 highlights the importance of civic engagement,” said Chris Dizon, founder of Endless Energy, expert witness in the case as a small solar developer, and Vote Solar member. “Go to town halls, talk to your commissioner and vote when the time comes. We need to ensure that our elected commissioners support fair electric rates and strong self-generation policies.”

In its final order, the Commission identified a number of problematic aspects with Rate 59:

• The standby rate is not cost-based;
• SPS’s study of the costs and benefits of distributed generation was “riddled with errors” and unreliable; and
• SPS did not calculate the benefits of distributed generation to the SPS system.

“Without Rate 59, families and small businesses in southeast New Mexico will have the first meaningful opportunity in years to invest in rooftop solar,” said Earthjustice attorney Sara Gersen. “This is great news for New Mexico. More clean energy from rooftop solar means less dirty energy from burning coal and gas.”  

“We applaud the Commission’s decision to eliminate this utility-imposed penalty on customers who want to contribute to their energy needs,” Megan O’Reilly, attorney for the Coalition for Clean Affordable Energy stated. “The eastern part of our state also has fantastic renewable resources and SPS customers should be able to take advantage of those.”

The Commission will open a rulemaking to consider corporate utilities’ ability to impose future fees on customers with rooftop solar and other on-site energy generation. New Mexico statute only allows these special fees to recover the costs of ancillary and standby services. The Hearing Examiner in the SPS case recommended the Commission rule that Rate 59 was also invalid because the types of costs it collected were not the costs of providing ancillary and standby services. The Commissioners chose not to adopt this part of the recommendation, which would have prevented SPS from reapplying to charge solar customers for these costs in the future, and also set a precedent for what the other corporate utilities could charge solar customers. Earthjustice, the Coalition for Clean Affordable Energy and Vote Solar will keep fighting to make sure the Commission doesn’t allow unlawful solar fees in the future.  

In an earlier 2015 settlement, Earthjustice, Vote Solar, and the Coalition for Clean Affordable Energy successfully prevented SPS from raising the rate for most customers, and decreased it for others. Today’s decision by the Commission to cancel the rate altogether came after SPS sought to raise the rate yet again, this time by about 14 percent.